Choosing a boutique firm as one path into management consulting is a popular choice. While boutique consulting firm appear to operate like McKinsey and BCG, and may even be led by ex-partners, there business models typical mean they create overwhelmingly different experiences for their consultants.

After leaving the Firm, I led a very large boutique with over 150 employees. These observations are based on that experience and that of every colleague I have seen who went on to start either a 1-man practice or lead a firm around 20-30 people in size. Irrespective of the size, and the token positive picture they try to paint, they all eventually face the same problems, and soon close up shop or branch out into other areas to create revenue.

This podcast will explain the following difference you will need to consider when joining a boutique:

• What value is there to having a miniature version of McKinsey or BCG when the full-scale version does quite well in serving larger, complex companies? If boutiques exist since they serve smaller companies, what value would you get from that experience versus serving larger and more complex companies?

• The 4 things owners of boutique firms must do every day or they will soon die: gaining clients, delivering engagements, developing intellectual property and developing people. These are hard to do. You need to be machine to accomplish this on a scaled basis.

• The inherent challenges of a business model where partners essentially go to retire, though few will admit this, and may be unwilling and or unable to maintain the culture of learning and growth which epitomizes McKinsey and BCG.

• How do you grow and learn if the partners above you will likely not be retiring anytime soon or may not have a culture of passing ownership to a new generation of consultants?

• The challenges of being objective when a handful of clients generate 80% of revenue and their need to be kept happy all the time.

• The problems firms have in managing boom and bust cycles and what this mean for your work hours during such cycles.

• The economic problems boutiques have in managing out poor performers when the cost of firing is less than the cost to find and train a replacement. Essentially, it leads to depressed wages and unhappy consultants.

• The challenges senior members of the team face when the senior partners may be unwilling to step down or hand over client relationships.

• In a nutshell, what is the end-game for you in an entity where ownership, or the partnership ethos, will always be controlled by one or two people, because they generate the most revenue, when revenue generation should not be the ultimate objective?

That is the question you need to answer, and be comfortable with the answer.

Training by ex-McK, BCG et al. Partners

Receive free exclusive episodes to advanced strategy and case interview training programs, plus a chapter from Bill Matassoni's Memoir. This is the ONLY way to sample FC Insider material.

Where else can you learn from ex-partners?

Sign up to receive exclusive FC Insider episodes. Start now:

Privacy Policy


5 responses to Choosing Boutique Firms over McKinsey

  1. Hi Michael,
    Thanks for clarifying FC’s strategy.


  2. Hi Sophia,

    Our strategy is to work for federal government companies like Fannie Mae, Freddie Mac, Import-Export Credit Guarantee Bank etc. This is because state-owned-enterprises are much more likely to be willing to make their data publicly available.

    Private and publicly listed companies are wary of our model of sharing all information.

    We work in both the major emerging markets and major developed economies.


  3. Hi Michael,
    Thank you for taking the time to answer my questions in detail. I’m glad you answered them from the perspective of senior executives.

    Your point about making the client act is by far the most important. There’s little point providing recommendations if the client is unwilling or unable to act on them.

    Just to confirm, is FC’s core emerging markets strategy or is it broader than that?

    Thanks Michael.


  4. Hi Sophia,

    These are all great questions. When answering these questions I will do so from the perspective of the audience, very senior executives. We will not answer them from the perspective of younger/junior professionals who may have strong and valid ideas, but are not the target audience. I say this because we mostly see surveys and opinions of the younger group though they are not the audience for consulting firms.

    1 – Do not underestimate the power of a brand in this field. The only thing that trumps a corporate brand is a personal brand aka a boutique firm headed by one well regarded person. It is always going to come down to a brand fight: is McKinsey or the McKinsey team regarded as better than the boutique firm led by partner x.

    The main reason for choosing the Big 3 is consistency. You know what you are getting. Yes, boutiques may be better, but how do you you this particular boutique sitting before you is one of the better boutiques? In the absence of that information, a big 3 firm always looks more appealing.

    It is the same reason people go to Starbucks. Yes, the coffee sucks versus specialist stores but it is a trial and error process to find a good specialist store. It is far easier to get something good, but not great at Starbucks. You can apply that thinking to consulting firms. The standard deviation of study quality at the big 3 is far lower while the mean is higher. For boutiques, the standard deviation is much higher while the mean is lower.

    Therefore, the extreme positive for the boutique distribution is much higher – implying the best are better than the big 3.
    The flip side is that the extreme negative is much lower – implying the worst is terrible compared to the worst study from the big 3.

    2 – Yes, it is possible. While we would have matched them on the analyses, the real test is our ability to draw insights and that comes down to creativity, caring and business judgement. There is no reason to assume another team could not have done that better. Of course, there is no evidence to assume they could have. In every study, it can be done better. Yet, the question is not if the study was better, but if it got the client to act. There, we did very well. I cannot imagine a better outcome.

    Yes, a different team would have certainly have come up with a different conclusion because they would have interpreted the data differently and asked different questions.

    That does not mean they would have been correct.

    3 – That is easy. Operations and Implementation. The former being far bigger, while implementation is just grouped here since it is like an orphan practice. Note that in many countries, consulting firms must post their financial results with a government body. So for the Czech Republic etc., you can get McKinsey and BCG’s actual numbers. It is not a secret.

    4 – I cannot speak to those firms as I would be speculating. We do not know much about them. I, however, doubt their rates are that high. I ran a boutique firm once with 250 people. When I was appointed to lead the firm, everyone spoke about their rates matching McKinsey. When I analyzed the numbers, I found they matched McKinsey rates on one study out of maybe 300. There is difference between having matched the rates and consistently matching the rates.

    5 – The future will belong to boutique firms. Every single industry fragments into specialists as it matures. Consulting will be no different and cannot defy the principles of economics. The trick is to be a specialist that really, really picks a niche and just continuously reinvents it. Never ever expand because you end up with a mix of margins while specialization forces high margins.

    Sticking to your core is tough though. We are constantly – as in weekly – receiving requests to do other things. We turn them down but it is really, really, really hard to do so. We turned down several studies from the LAB work because it was not our core.

    Hope that helps.


  5. Hi Michael,
    This is an interesting podcast which got me thinking about boutiques vs the Big 3. Also, according to a HBR article (, approximately only 20% of classic strategy work is now done by the Big 3, the remaining 80% is now done by boutique firms.

    I’ve got a few questions Michael:

    1) Assuming strategy is a process (going by your Strategy Training & LAB study), access to resources is available to everyone (Hoovers, etc.), and a boutique is attracting the best talent (think Wachtell Lipton law firm as a boutique example), besides perceived branding value of the Big 3, why would the Big 3 be chosen over a boutique?

    2) Do you believe a BIG 3 firm would have done the LAB study at a higher quality than FC did? Would they have provided different outcomes or recommendations?

    3) If you know or had to guess, where are the Big 3 deriving the majority of the consulting revenue from? Implementation, Technology solutions, Operational Excellence, etc?

    4) If you look at some of the boutiques like Mars Consulting (only 300 people or so), how are they continuing to do well and at the same time charge similar rates to the Big 3?

    5) Given the Big 3 don’t always deliver and some actually have quite poor track records with their advice and implementation, what is your outlook for boutique vs Big 3 in the future? I know you have a lot of faith in Deloitte and Roland Berger, but what about the smaller and up-and-coming boutiques which provide excellent value and analyses (they are taking a lot of business away from the Big 3)?

    Thanks Michael,


    Thanks Michael

Leave a reply

You must be logged in to post a comment.